The enduring blight of inequality

How much longer are we prepared to accept the level of inequality that exists in the world?

How much longer are we prepared to accept the level of inequality we now suffer in this country?

If any reader out there still doubts the extent of inequality here, do read a July 8 article in The Conversation by Nicholas Biddle, Associate Professor, and Francis Markham, Research Fellow at the ANU College of Arts and Social Sciences titled: What income inequality looks like across Australia.

They begin: ‘With affordable houses increasingly out of reach, wage growth slow and household debt high, Australians are certainly feeling poor.’ They conclude: ‘Australia has prominent examples of economic policies that disproportionately benefit the upper-middle class, such as the capital gains tax discount and superannuation tax incentives. It also has a geographically concentrated income distribution, with the rich living in neighbourhoods with other rich people. The poor are also more likely to live in close proximity to people who share their disadvantage.’

Treasurer Scott Morrison though insists that inequality is lessening!

A couple of weeks ago I wrote Inequality ambylyopia to highlight the blindness of conservatives, notably our own Treasurer, to the reality and the extent of inequality in this country. The piece argued that while the facts about inequality were abundant and visible to everyone, by the time the evidence reached their visual cortex it had become invisible, just as images transmitted by an amblyotic (lazy) eye are not interpreted properly.

Bill Shorten predicts that inequality will be an issue at the next election. This prediction is not new. In April of last year, before the 2016 federal election, I made the same prediction and wrote Inequality will be a hot button election issue.. It didn’t turn out that way; Shorten is hoping that by the next election inequality and its awful consequences will be burned into the minds of voters, and will influence their voting as he guarantees to do something about it. He will need a sound plan, an understandable and plausible set of objectives, and some appealing slogans to attract attention.

Inequality is omnipresent and persistent. To remind us of this it is worth looking back a little to ascertain if anything has changed.

It is now well over a year since Inequality will be a hot button election issue was published on The Political Sword. It began:

‘Inequality’ is a term used by economists. Joseph Stiglitz has been writing for years about its damaging effect. His book: The Price of Inequality is a classic. More recently, Thomas Piketty entered the arena with his Capital in the Twenty-First Century and hypothesised about the genesis of inequality. He asserted that the main driver of inequality, namely the tendency of returns on capital to exceed the rate of economic growth, threatens to generate extreme inequalities that stir discontent and undermine democratic values. He reminded us that political action has curbed dangerous inequalities in the past and could do so again. But is anyone listening?

No matter who writes about inequality, the conclusion is the same: the gap between those at the top and those languishing at the bottom of the pile is widening in many countries, ours among them.

A more familiar way of talking about inequality is to talk about ‘fairness’, a concept every Aussie understands. The ‘fair go’ is valued by most of us. Who would argue against the idea that everyone should have a ‘fair go’?

So look out for emphasis on fairness during the election campaign. You will hear it from Bill Shorten and Labor people; you might not hear much about it from LNP people, although PM Turnbull has often insisted that whatever changes his government makes to the tax system, they must be ‘fair’. We are still waiting to see his version of fairness. Although aware of the angry reaction of the people to the unfair 2014 Abbott/Hockey Budget, he is still seeking approval of many of the elements of it in the Senate. Treasurer Morrison does not seem to have ‘fair’ in his vocabulary.

Have you noticed that ordinary people are becoming increasingly fed up with the inequality we see day after day where those at the top of the pile gain advantages over those at the bottom? In the past few weeks we have seethed as we saw instance after instance of this. More of this later!

If you question whether inequality really is a problem in this country, take a look at these statistics, which are based on a 2015 ACOSS study: Inequality in Australia: a nation divided:

• Inequality in Australia is higher than the OECD average. • A person in the top 20% income group has around five times as much income as someone in the bottom 20%. • There is an urban and regional pattern to income inequality, with people in capital cities more likely to be in the top 20%, while those outside capital cities are more likely to be in the bottom 20%. • Wealth is far more unequally distributed than income. A person in the top 20% has around 70 times more wealth than a person in the bottom 20%. • The top 10% of households own 45% of all wealth, most of the remainder of wealth is owned by the next 50% of households, while the bottom 40% of households own just 5% of all wealth. • The average wealth of a person in the top 20% increased by 28% over the past 8 years while for the bottom 20% it increased by only 3%.

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12 comments

The last dot point is the one that people are angry about. Everything the Coalition govt does has the effect of transferring wealth upwards, and this statistic best shows how successful they have been.

Inequality must be the central issue of the next election. The ALP have signaled as such, so if they don’t they will lose!

Jeremy Corbyn, recognised the issue and look at his success. Of course Bill is not Jeremy, and nor should he be, but the facts remain clear, the greatest time for working man (and business) was when the USA, Britain and Australia, N Zealand, Canada and Europe, took the advoce of John Maynard Keynes. That advice ushured in the biggest growth period since the Great Depression ( no it wasnt perfect and it never got finnished, but it was a start). Then along came Hayek, Friedman, Arthur Laffer, Reagan and Thatcher, and we have slowly but surely reversed the prosperity of all for the greed of the few.

Jeremy Corbyns catch phrase “For the many not the few” says it all in 6 words.

S G B

wamOctober 2, 2017 at 11:29 am

fair go is q superior concept to either fair or inequality. The latter is now gay marriage and complicated ‘Inequality is still relatively high by modern standards but the narrative that says inequality is ever rising is patently false,” Professor Wilkins told the Melbourne Institute/The Aust­ralian Economic and Social Policy Conference in Melbourne yesterday. Pointing out that the proportion of Australians over 15 with incomes less than half the median level of income had fallen to about 10 per cent, he added: “If anything, inequality has been declining.” and the former is jinxed with millions of aussies who think twiggy’s card is fair labor’s problem is delivery of the concept for it to have an effect in an election

David BruceOctober 2, 2017 at 3:35 pm

When Australia has a prime minister who is part of the 1%, it makes you wonder if any one is awake?

Matters NotOctober 2, 2017 at 4:11 pm

Most people have little understanding as to the extent of inequality – even in relatively veryrich countries.

Despite the best efforts of the corporate world the 20th century welfare state still survives in reduced form in many countries. Unfortunately the world’s neo-liberal politicians do not regard the public good as the primary aim of government. They would rather cater to the demands of business, banks and the wealthiest 10%.

It is doubtful that the Labor party can shake off it’s own preoccupation with serving over-powerful interests to restore public faith in our damaged democracy.

It is not merely a short-sighted view that informs the wealthy and powerful people who run the current government according to the 1980s neo-conservative rules. They cannot believe that trickle-down does not work, and they are sure that if they just reduce taxes on the rich and combine that with a more and more flexible (ie exploitative) workplace, everything will start going well. They see the economy as an engine that just needs tuning and then Government’s role is to steer. That they think $250 per week is adequate support for the various types of unemployed people and that it is appropriate to stop that income entirely if the claimant fails to toe the line shows the other part of neo-con belief. That the poor choose poverty, and fail to capitalise on their opportunities. Beggars and homeless people in the street are not seen as signals of society in decay (no such thing as society, remember), but as necessary to the maintenance of a hungry workforce who will do any job for little pay, to stay one step above the reality of total destitution.

May I thank you all for your informative comments, which I’ve read just now as I’m travelling in Queensland.

Anyone who needs still more evidence that inequality is an enduring blight on our community ought to read an article in ‘The Conversation’ by two Grattan Institute authors titled: ‘Three charts on: the great Australian wealth gap’, which begins:

“It’s a tale of two Australias: older Australians are getting much wealthier, and the young are being left behind.

“It’s a story only too familiar to Australians under 45 who have struggled to save enough money to access the housing market in Australian cities. They are a generation for whom the great Australian dream of home ownership has become largely elusive.”

I do think that @philgorman2014 has focused on a really crucial point which is the notion of the public good and the need for it to be central to public policy. Increasingly it has been displaced by the notion of ‘private goods’ and governments of all colours across the West have justified it through a generally unacknowledged version of John Rawles’ Theory of Justice which can be summarized as stating simply that, as long as everyone is slightly better off it doesn’t matter how much better off the best off become. (Calculating how people are better or worse off is,of course, dependent on political persuation.)

Generally, inequality beyond a certain point is a cancer on society and we’ve gone past that point here in Australia. In the UK and, especially, in the USA they’ve moved well beyond the point and I have real concerns about what will happen to Australia if the forces that would like to make us more like the UK/USA win. Equality is something worth fighting for.

margcalOctober 2, 2017 at 10:18 pm

David Bruce, we’re awake, but unlike Turnbull, none of the rest of us could afford to buy the prime-ministership.

KronomexOctober 3, 2017 at 7:05 pm

We shall hear words of contrived sorrow from Turdbull and Tugsalot will be trying to make sure none of them can claim benefits because they’ll have money in the bank and can live off that rather than living off the tax payer.